[Federal Register Volume 66, Number 233 (Tuesday, December 4, 2001)]
[Notices]
[Pages 63074-63076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29970]


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NUCLEAR REGULATORY COMMISSION

[Docket Nos. 50-220 and 50-410 License Nos. DPR-63 and NPF-69]


Niagara Mohawk Power Corporation, et al., (Nine Mile Point 
Nuclear Station, Unit Nos. 1 and 2); Supplemental Order Regarding 
Approval of Transfer of Licenses and Approving Conforming Amendment

I

    Niagara Mohawk Power Corporation (NMPC) is the exclusive owner and 
operator of Nine Mile Point Nuclear Station, Unit 1 (NMP-1), and in 
regard thereto, holds Facility Operating License No. DPR-63. NMPC is 
also part-owner and exclusive operator of Nine Mile Point Nuclear 
Station, Unit No. 2 (NMP-2), and in connection therewith, is a holder 
of Facility Operating License No. NPF-69. The other co-owners of NMP-2 
and holders of the license are New York State Electric & Gas 
Corporation (NYSEG), Rochester Gas and Electric Corporation (RG&E), 
Central Hudson Gas & Electric Corporation (CHGEC), and Long Island 
Lighting Company (LILCO, which is doing business as Long Island Power 
Authority). NMP-1 and NMP-2 (the facilities) are located at the 
licensees' site in Oswego County, New York.

II

    By application dated February 1, 2001, Constellation Nuclear, LLC, 
on behalf of its indirect subsidiary Nine Mile Point Nuclear Station, 
LLC (NMP LLC), and NMPC, NYSEG, RG&E, and CHGEC requested the consent 
of the U.S. Nuclear Regulatory Commission (NRC or Commission) to a 
proposed direct transfer of the licenses for NMP-1 and NMP-2, to the 
extent held by the foregoing applicants, to NMP LLC. The application 
was supplemented by submittals from Constellation Nuclear, LLC, dated 
March 1, March 16, March 29, April 5, April 27, May 30, and June 7, 
2001 (collectively herein referred to as the Application). The 
Application also requested the approval of conforming license 
amendments to reflect the direct transfer of the licenses. The 
Application further requested consent to certain indirect transfers of 
the licenses, to the extent such would occur following the direct 
transfers resulting from (1) a planned realignment or restructuring of 
the Constellation Energy Group (CEG), Inc., of which NMP LLC is a part, 
and the establishment of a new intermediate parent company of NMP LLC 
referred to as New Controlled, and (2) the

[[Page 63075]]

acquisition by Virgo Holdings, Inc. (Virgo), an indirect subsidiary of 
The Goldman Sachs Group, Inc., of an equity interest in NMP LLC and up 
to a 17.5% voting interest in New Controlled, coupled with the 
distribution of the remaining voting shares of New Controlled, all of 
which would be held by CEG, Inc., up to the time of distribution, to 
the existing public shareholders of CEG, Inc., leaving Virgo with the 
largest single voting interest in NMP LLC's ultimate parent company.
    The Application provided that in connection with the direct 
transfers, NMP LLC would assume title to NMP-1 following approval of 
the proposed license transfers, and would assume the 82% ownership 
interest in NMP-2 currently held by NMPC (owner of a 41% interest), 
NYSEG (18% interest), RG&E (14% interest) and CHGEC (9% interest). 
LILCO is not involved in the direct transfer of NMP-2 and, therefore, 
will remain a licensee with respect to its 18% ownership interest. In 
addition, NMP LLC would become responsible for the operation of both 
NMP-1 and NMP-2. The Application stated that NMP LLC would also assume 
the decommissioning responsibility of the current owners of NMP-1 and 
NMP-2 transferring their interests in the facilities to NMP LLC. NMP 
LLC would provide decommissioning funding assurance through the use of 
decommissioning trusts coupled with parent company guarantees.
    The Application proposed conforming license amendments that would 
replace references to NMPC, NYSEG, RG&E, and CHGEC in the licenses with 
references to NMP LLC, as appropriate, and make other administrative 
changes to reflect the proposed direct transfer.
    The Commission published a notice of the request for approval and 
an opportunity for a hearing in the Federal Register on April 2, 2001 
(66 FR 17584). The Commission received no comments or requests for 
hearing pursuant to the notice. The NRC staff approved the proposed 
direct and indirect license transfers by an Order dated June 22, 2001. 
That Order, which contained several conditions of approval, was based 
in part on the premise that the NMPC, RG&E, CHGEC and NYSEG interests 
would be transferred concurrently.
    By a submittal dated September 10, 2001, Constellation Nuclear, 
LLC, NMPC, CHGEC and RG&E stated that due to certain delays in 
receiving other necessary regulatory approvals, their interests in the 
NMP-1 and NMP-2 licenses may need to be transferred to NMP LLC prior to 
any transfer of NYSEG's interest in NMP-2. The September 10, 2001, 
submittal was supplemented by a letter dated September 26, 2001, from 
Constellation Nuclear, LLC, and NMPC, and a letter dated September 28, 
2001, from J.E. Silberg, counsel to Constellation Nuclear, LLC. These 
letters are collectively referred to as the Supplemental Application. 
The Supplemental Application requested NRC consent to the direct 
transfer approved by the June 22, 2001, Order occurring in two phases, 
i.e., the NMPC, CHGEC, and RG&E transfers would occur first, followed 
by the NYSEG transfer.
    The Supplemental Application also requested approval of a 
conforming license amendment for NMP-2 to reflect the first phase of a 
two-phase direct transfer of the interests in NMP-2. The amendment 
would delete references to NMPC, CHGEC, and RG&E to reflect the 
transfer of their interests to NMP LLC, but leave NYSEG on the license.
    Approval of the two-phase completion of the previously approved 
direct transfers involving NMP-2 and corresponding conforming license 
amendment to reflect the completion of the first phase was requested 
pursuant to 10 CFR 50.80 and 50.90. The NRC staff determined that the 
Supplemental Application relates only to schedular matters and did not 
involve any material changes to the underlying basis for the transfer 
approval Order dated June 22, 2001. Therefore, the Supplemental 
Application was within the scope of the April 2, 2001, Federal Register 
notice cited above and did not require renoticing or a new opportunity 
for a hearing.
    Pursuant to 10 CFR 50.80, no license, or any right thereunder, 
shall be transferred, directly or indirectly, through transfer of 
control of the license, unless the Commission shall give its consent in 
writing. After reviewing the information submitted in the Supplemental 
Application and other information before the Commission, the NRC staff 
has determined that its previous findings set forth in the Order dated 
June 22, 2001, remain valid notwithstanding that the transfers may 
occur in two phases, namely, NMP LLC is qualified to hold the licenses 
for NMP-1 and NMP-2 to the same extent the licenses are now held by 
NMPC, CHGEC, RG&E and NYSEG, and that the transfer of the licenses, as 
previously described herein, is otherwise consistent with applicable 
provisions of law, regulations, and orders issued by the Commission, 
subject to the conditions described herein. The NRC staff has further 
found that the Supplemental Application for the proposed license 
amendment to reflect the first phase of a potential two-phase transfer 
complies with the standards and requirements of the Atomic Energy Act 
of 1954, as amended (the Act), and the Commission's rules and 
regulations set forth in 10 CFR chapter I; the facility will operate in 
conformity with the Supplemental Application, the provisions of the 
Act, and the rules and regulations of the Commission; there is 
reasonable assurance that the activities authorized by the proposed 
license amendment can be conducted without endangering the health and 
safety of the public and that such activities will be conducted in 
compliance with the Commission's regulations; the issuance of the 
proposed license amendment will not be inimical to the common defense 
and security or to the health and safety of the public; and the 
issuance of the proposed license amendment will be in accordance with 
10 CFR part 51 of the Commission's regulations and all applicable 
requirements have been satisfied. These findings are supported by a 
safety evaluation dated October 30, 2001.

III

    Accordingly, pursuant to sections 161b, 161i, and 184 of the Atomic 
Energy Act of 1954, as amended, 42 U.S.C. Secs. 2201(b), 2201(i), and 
2234, and 10 CFR 50.80, it is hereby ordered that the direct NMP-2 
license transfer previously approved by the June 22, 2001, Order, from 
NMPC, CHGEC, RG&E and NYSEG, to NMP LLC may occur in two phases, as 
described above, subject to the following conditions:
    (1) NMP LLC shall, prior to the completion of each direct transfer, 
have provided to the Director of the Office of Nuclear Reactor 
Regulation satisfactory documentary evidence that NMP LLC has obtained 
the appropriate amount of insurance required of licensees under 10 CFR 
Part 140 of the Commission's regulations.
    (2) On the closing date(s) of the transfer of the NMPC, RG&E, 
CHGEC, and NYSEG interests in NMP-1 and NMP-2 to it, NMP LLC shall: (1) 
Obtain from the transferors then transferring their interests all of 
their accumulated decommissioning trust funds for NMP-1 and NMP-2, 
respectively, and (2) receive [a] parent company guarantee[s] pursuant 
to 10 CFR 50.75(e)(1)(iii)(B) (to be updated annually) in a form 
acceptable to the NRC and in [an] amount[s] which, when combined with 
the decommissioning trust funds for NMP-1 and NMP-2 that have been 
transferred, equals or exceeds the total amounts for NMP LLC's then 
resulting total ownership share of NMP-1 and

[[Page 63076]]

NMP-2, respectively, pursuant to 10 CFR 50.75(b) and (c).
    (3) The master decommissioning trust agreement for NMP-1 and NMP-2, 
at the time any subject direct transfer is effected and thereafter, is 
subject to the following:
    a. The decommissioning trust agreement must be in a form acceptable 
to the NRC.
    b. With respect to the decommissioning trust funds, investments in 
the securities or other obligations of CEG Inc., New Controlled, or 
their affiliates, successors, or assigns, are and shall be prohibited. 
Except for investments tied to market indexes or other non-nuclear 
sector mutual funds, investments in any entity owning one or more 
nuclear power plants are and shall be prohibited.
    c. The decommissioning trust agreement must provide that no 
disbursements or payments from the trusts, other than for ordinary 
administrative expenses, shall be made by the trustee unless the 
trustee has first given the NRC 30 days prior written notice of the 
payment. The decommissioning trust agreement shall further contain a 
provision that no disbursements or payments from the trusts shall be 
made if the trustee receives prior written notice of objection from the 
Director of the Office of Nuclear Reactor Regulation.
    d. The decommissioning trust agreement must provide that the 
agreement cannot be amended in any material respect without 30 days 
prior written notification to the Director of the Office of Nuclear 
Reactor Regulation.
    e. The appropriate section of the decommissioning trust agreement 
shall state that the trustee, investment advisor, or anyone else 
directing the investments made in the trusts shall adhere to a 
``prudent investor'' standard, as specified in 18 CFR 35.32(a)(3) of 
the Federal Energy Regulatory Commission's regulations.
    (4) NMP LLC shall take all necessary steps to ensure that the 
decommissioning trusts are maintained in accordance with the 
Application, the requirements of the June 22, 2001, Order (amended by 
this Order herein), and the related safety evaluation.
    (5) At the time any subject direct transfer is effected, NMP LLC 
shall enter or shall have entered into an intercompany credit agreement 
with Constellation Energy Group (CEG), Inc., or New Controlled, 
whichever entity is the ultimate parent of NMP LLC at that time, in the 
form and on the terms represented in the Application. Should New 
Controlled become the ultimate parent of NMP LLC following the direct 
transfer of the licenses to NMP LLC, NMP LLC shall enter or shall have 
entered into a substantially identical intercompany credit agreement 
with New Controlled at the time New Controlled becomes the ultimate 
parent; in such case, any existing intercompany credit agreement with 
CEG, Inc. may be canceled once the intercompany credit agreement with 
New Controlled is established. Except as otherwise provided above, NMP 
LLC shall take no action to void, cancel, or modify any intercompany 
credit agreement referenced above, without the prior written consent of 
the Director of the Office of Nuclear Reactor Regulation.
    (6) NMPC shall inform the Director of the Office of Nuclear Reactor 
Regulation of the date(s) of the closing of the direct transfers no 
later than two business days prior to such respective date(s). If all 
of the direct and indirect transfers of the licenses approved by the 
June 22, 2001, Order, as supplemented by this Order are not completed 
by June 30, 2002, this Order and the June 22, 2001, Order shall become 
null and void with respect to those transfers not so completed, 
provided, however, upon written application and for good cause shown, 
such date may in writing be extended.
    It is further ordered that, consistent with 10 CFR 2.1315(b), a 
license amendment that makes changes, as indicated in Enclosure 2 to 
the cover letter forwarding this Supplemental Order, to conform the 
operating license for NMP-2 to reflect the subject first phase of the 
direct license transfers, is approved. If NMPC, RG&E, and CHGEC 
transfer their interests in NMP-2 to NMP LLC and NYSEG does not 
concurrently transfer its interest in NMP-2, the amendment shall be 
issued and made effective at the time NMPC, RG&E, and CHGEC transfer 
their interests in NMP-2 to NMP LLC.
    It is further ordered that, to the extent any of the conditions of 
the June 22, 2001, Order, and conditions contained in the conforming 
license amendments approved by that Order, are inconsistent with the 
conditions contained in this Supplemental Order and conditions 
contained in the amendment approved by this Supplemental Order, all 
such inconsistent conditions of the June 22, 2001, Order, and all such 
inconsistent conditions contained in the conforming license amendments 
approved by that Order, are hereby modified to be consistent with the 
conditions contained in this Supplemental Order and conditions 
contained in the license amendment approved by this Supplemental Order. 
License amendments for NMP-1 and NMP-2, as approved by the June 22, 
2001, Order, and as modified herein, or the license amendment as 
approved by this Supplemental Order, shall be issued as appropriate and 
made effective at the time the corresponding license transfers occur.
    This Supplemental Order is effective upon issuance.
    For further details with respect to this Supplemental Order, see 
the Supplemental Application transmitted by letters dated September 10, 
26, and 28, 2001, the associated supplemental safety evaluation dated 
October 30, 2001, and the Order and its associated safety evaluation 
both dated June 22, 2001. All of these documents are available for 
public inspection at the Commission's Public Document Room at One White 
Flint North, 11555 Rockville Pike (first floor), Rockville, MD, and are 
accessible electronically through the ADAMS Public Electronic Reading 
Room link at the NRC Web site http://www.nrc.gov.

    Dated at Rockville, Maryland, this 30th day of October, 2001.

    For the Nuclear Regulatory Commission
Samuel J. Collins,
Director, Office of Nuclear Reactor Regulation.
[FR Doc. 01-29970 Filed 12-3-01; 8:45 am]
BILLING CODE 7590-01-P